FTA Comment Letter on CFPB’s BNPL Interpretive Rule
The Financial Technology Association submitted a comment letter in response to the Consumer Financial Protection Bureau’s (“CFPB”) Interpretive Rule regarding the Truth in Lending Act (and Regulation Z) and the Use of Digital User Accounts to Access Buy Now, Pay Later Loans (the “Rule”).
“FTA members are committed to consumer protections for Buy Now, Pay Later (“BNPL”) products, including processes to address disputes and refunds,” wrote FTA President and CEO Penny Lee. “We also agree that these protections should be consistent across the BNPL industry. However, we respectfully disagree with the Rule’s wholesale application of Regulation Z requirements, specifically designed for credit cards, to BNPL products. BNPL products are fundamentally different from credit cards. For example, BNPL products do not involve a physical card or credit card numbers that can be easily lost or stolen and misused by unauthorized users. Moreover, BNPL products have zero-to-low APRs, no annual or monthly fees, and no ability to revolve balances. This Rule appears to be a substantive amendment to Regulation Z and is inconsistent with the existing definition of “Credit Card.” As discussed below, this change ultimately raises more questions than it answers regarding how to operate in compliance with the law. For those reasons, among others, this Rule should comply with both the Administrative Procedure Act (“APA”) and the Dodd-Frank Act’s (“DFA”) rulemaking requirements.”
FTA Comment Letter on CFPB’s BNPL Interpretive Rule
The Financial Technology Association submitted a comment letter in response to the Consumer Financial Protection Bureau’s (“CFPB”) Interpretive Rule regarding the Truth in Lending Act (and Regulation Z) and the Use of Digital User Accounts to Access Buy Now, Pay Later Loans (the “Rule”).
“FTA members are committed to consumer protections for Buy Now, Pay Later (“BNPL”) products, including processes to address disputes and refunds,” wrote FTA President and CEO Penny Lee. “We also agree that these protections should be consistent across the BNPL industry. However, we respectfully disagree with the Rule’s wholesale application of Regulation Z requirements, specifically designed for credit cards, to BNPL products. BNPL products are fundamentally different from credit cards. For example, BNPL products do not involve a physical card or credit card numbers that can be easily lost or stolen and misused by unauthorized users. Moreover, BNPL products have zero-to-low APRs, no annual or monthly fees, and no ability to revolve balances. This Rule appears to be a substantive amendment to Regulation Z and is inconsistent with the existing definition of “Credit Card.” As discussed below, this change ultimately raises more questions than it answers regarding how to operate in compliance with the law. For those reasons, among others, this Rule should comply with both the Administrative Procedure Act (“APA”) and the Dodd-Frank Act’s (“DFA”) rulemaking requirements.”
Read FTA’s full comment letter here.